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DOE contract could enable data-center consolidation

ESPCs foster energy conservation, speaker says

By Rutrell Yasin

Oct 26, 2010

How should agencies fund data-center consolidation initiatives?

Try using the Department of Energy’s Energy Savings Performance Contracts, said Doug Bourgeois, vice president and chief cloud executive with VMware, speaking at a cloud computing conference today. The contracts let agencies embark on energy-savings projects without upfront capital costs and without special Congressional appropriations. An ESPC is a partnership between the federal agency and an energy-service provider company.

Bourgeois was speaking at the Virtualization, Cloud Computing and Green IT conference held in Washington, D.C., by 1105 Government Information Group.

Bourgeois characterized the contracts as a solution for agencies with little funding available for data-center consolidation. His perception appeared to be shared by conference attendees as well, which aligns with a recent report by government research and market firm Input.

The changes needed to produce a large-scale reduction in an agency’s real estate footprint and other physical structure changes will take a lot of money and time, according to Input's report “Assessment of the 2010 Federal Data Center Consolidation Initiative.”

Under ESPCs, the private sector companies invest in new physical infrastructure and provide services that lower the cost of operations for agencies, said Bourgeois, who was director of the Interior Department’s National Business Center prior to joining VMware.

The energy-service provider conducts a comprehensive energy audit for the federal facility and identifies improvements to save energy, according to the DOE. After consulting with the agency, the company designs and constructs a project that meets the agency's needs and arranges the necessary financing.

The company guarantees that the improvements will generate energy cost savings sufficient to pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency. Contract terms up to 25 years are allowed, the DOE states.

The contracts are not directly tied to data-center consolidation, he said, but they can be aligned with such a project.

More than 550 ESPC projects worth $3.6 billion were awarded to 25 federal agencies and organizations in 49 states and D.C. as of March 2010, according to DOE’s Federal Energy Management Program.

These projects saved an estimated 30.2 trillion British Thermal Units annually, equivalent to the energy consumed by a city with a population of 818,000. They also saved $11 billion in energy costs, DOE said.